An Equated Monthly Installment (EMI) is a fixed payment that covers both interest and principal over the loan tenure. Early EMIs are interest-heavy; later EMIs pay down principal faster.
The standard EMI formula
For monthly compounding:
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P = principal (loan amount)
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = number of months
What changes your EMI
- Higher principal → higher EMI
- Higher rate → higher EMI
- Longer tenure → lower EMI, but more total interest paid
Smart comparison checklist
Compare APR/effective rate, processing fees, prepayment charges, and total interest—not EMI alone. A slightly higher EMI with a shorter tenure often saves money.
Try different principal, rate, and tenure combinations in the EMI Calculator and Loan Calculator before you sign.